PacBio's (PACB) Q3 Earnings Top Estimates, Revenues Lag

Pacific Biosciences of California, Inc. PACB, popularly known as PacBio, delivered adjusted loss per share of 32 cents in the third quarter of 2022, wider than the year-ago loss of 23 cents per share. The figure was, however, narrower than the Zacks Consensus Estimate of a loss of 35 cents.

The company’s GAAP loss per share was 34 cents in the quarter against the year-ago earnings per share (EPS) of 8 cents.

Revenues in Detail

PacBio registered revenues of $32.3 million in the third quarter, down 7.4% year over year. The figure missed the Zacks Consensus Estimate by 8.5%.

The year-over-year decline was driven by lower Sequel IIe sales.

Geographical Analysis

PacBio’s revenues from the Americas were $16.7 million, which declined by 14% year over year. This has primarily resulted from lower Sequel IIe placements as customers delayed purchases due to lab space limitations funding and deferred orders due to the anticipation of a potential new sequencer launch. The region also experienced lower utilization as certain customers dealt with sample shortages and newer customers took longer to ramp.

In the Asia-Pacific region, PacBio recorded revenues of $9.6 million, reflecting a 4% uptick year over year, primarily driven by a recovery in China in the post-lockdown period.

EMEA region registered revenues of $6 million, which fell 6% year over year. This was primarily due to adverse impacts by the forex headwind of approximately 10% which pulled down the revenues in the region.

Segmental Analysis

Product revenues amounted to $27.5 million, down 9.8% from the prior-year quarter.

PacBio delivered 34 Sequel II/IIe systems during the third quarter of 2022 compared with 44 Sequel II systems placed in the year-ago quarter. This brings the total installed base of Sequel II/IIe systems to 494 as of Sep 30, 2022, compared with 326 as of Sep 30, 2021.

Instrument revenues for the third quarter of 2022 were $11.4 million, down 28.3% year over year.

Consumables revenues for the third quarter of 2022 were $16.1 million, up 10.3% from the prior-year quarter.

Service and other revenues came in at $4.8 million, up 9.5% year over year.

Pacific Biosciences of California, Inc. Price, Consensus and EPS Surprise

Pacific Biosciences of California, Inc. Price, Consensus and EPS Surprise

Pacific Biosciences of California, Inc. price-consensus-eps-surprise-chart | Pacific Biosciences of California, Inc. Quote

Margin Trend

In the quarter under review, PacBio’s adjusted gross profit fell 11.3% to $13.7 million. Adjusted gross margin contracted 190 basis points (bps) to 42.5%.

Sales, general and administrative expenses rose 16.4% to $36.8 million. Research and development expenses rose 71.2% year over year to $47.1 million. Adjusted total operating expenses of $83.9 million climbed 41.9% year over year.

The adjusted total operating loss totaled $70.2 million in the reported quarter compared with the prior-year quarter’s adjusted total operating loss of $43.6 million.

Financial Position

PacBio exited third-quarter 2022 with cash, cash equivalents and investments (excluding short-term and long-term restricted cash) of $834.3 million compared with $899.2 million at the end of the second quarter.

Guidance

PacBio has launched a few products during the third quarter of 2022, including Onso (a mid-throughput short-read sequencer based on the sequencing by binding technology acquired through Omniome last year) and Revio (its next-generation long-read sequencer). The company is currently waiting for its partners to provide feedback on Onso's performance in the field.

As a result of all these announcements, PacBio withdrew all prior financial guidance to better understand the impact the products will have on its operations.

Our Take

PacBio exited the third quarter of 2022 with lower-than-expected revenues and dismal bottom-line results, which are disappointing. The year-over-year fall in the top line and product revenues are disappointing. The fall in Instrument revenues and continued adjusted loss per share incurred by the company are also concerning. Lower revenues from the Americas and EMEA are worrying. The contraction of the adjusted gross margin does not bode well. The year-over-year operating loss for the company is another area of concern.

On a positive note, PacBio exited the third quarter with better-than-expected earnings. The company saw a robust increase in its Service and other revenues during the quarter, which is impressive. The company also gained from strength in its Consumables revenues during the reported quarter. Robust performance in the Asia-Pacific region is also encouraging. The company’s slew of launches over the past few months augurs well.

Zacks Rank and Stocks to Consider

PacBio currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader medical space that have announced quarterly results are AMN Healthcare Services, Inc. AMN, Medpace Holdings, Inc. MEDP and Merit Medical Systems, Inc. MMSI.

AMN Healthcare, carrying a Zacks Rank #2 (Buy), reported third-quarter 2022 adjusted EPS of $2.57, which beat the Zacks Consensus Estimate by 10.3%. Revenues of $1.14 billion outpaced the consensus mark by 3.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AMN Healthcare has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed estimates in all the trailing four quarters, the average being 10.9%.

Medpace Holdings, sporting a Zacks Rank #1, reported third-quarter 2022 EPS of $2.05, which beat the Zacks Consensus Estimate by 39.5%. Revenues of $383.7 million outpaced the consensus mark by 8.1%.

Medpace Holdings has an estimated growth rate of 44.9% for the full-year 2022. MEDP’s earnings surpassed estimates in all the trailing four quarters, the average being 22%.

Merit Medical, carrying a Zacks Rank #2, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.

Merit Medical has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.

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